Capital Structure and Debt Structure

56 Pages Posted: 19 Mar 2008 Last revised: 18 Feb 2010

See all articles by Joshua D. Rauh

Joshua D. Rauh

Stanford Graduate School of Business; Hoover Institution; National Bureau of Economic Research (NBER)

Amir Sufi

University of Chicago - Booth School of Business; NBER

Multiple version iconThere are 2 versions of this paper

Date Written: February 17, 2010

Abstract

Using a novel data set that records individual debt issues on the balance sheets of public firms, we demonstrate that traditional capital structure studies that ignore debt heterogeneity miss substantial capital structure variation. Relative to high credit quality firms, low credit quality firms are more likely to have a multi-tiered capital structure consisting of both secured bank debt with tight covenants and subordinated non-bank debt with loose covenants. We discuss the extent to which these findings are consistent with existing theoretical models of debt structure in which firms simultaneously use multiple debt types to reduce incentive conflicts.

Keywords: debt structure, bank debt, monitoring, credit ratings, private placements, commercial paper, convertible debt

JEL Classification: G32, G33, G21, M41

Suggested Citation

Rauh, Joshua D. and Sufi, Amir, Capital Structure and Debt Structure (February 17, 2010). AFA 2009 San Francisco Meetings Paper, EFA 2008 Athens Meetings Paper, Available at SSRN: https://ssrn.com/abstract=1097577 or http://dx.doi.org/10.2139/ssrn.1097577

Joshua D. Rauh (Contact Author)

Stanford Graduate School of Business ( email )

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Hoover Institution ( email )

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National Bureau of Economic Research (NBER)

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Amir Sufi

University of Chicago - Booth School of Business ( email )

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Chicago, IL 60637
United States

NBER

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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